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Hudson抯 Bay proving the department store is alive and wellWednesday, December 10, 2014 > 08:58:33
Canadian clothiers are getting crushed this year while department stores aren’t faring so well either. Just ask Mexx, Jacob and Smart Set, three long-time retailers who are about to disappear from the map.
Target and Sears Canada meanwhile are confronting well-documented challenges of their own. The trend is being bucked however by the longest-serving Canadian clothier and department store of them all: Hudson’s Bay.
On Tuesday, HBC said sales at established stores — a key metric that shows the ongoing pace of purchases — are trending higher, up 2.7 per cent across the board. That compares to falling same-store sales at Sears and elsewhere, as many North American retailers struggle to grow traffic levels to mall and outlet locations.
Guys go shopping
HBC’s momentum is coming for an nontraditional source, too: men. Men’s apparel sales led the uptick in growth at Hudson’s Bay in Canada as well as Saks Fifth Avenue locations south of the border in the latest three-month stretch, company execs said on a conference call.
“Ladies’ apparel has been very soft across the industry,” Richard Baker, HBC’s governor and chief executive said. “And we’re continuing to see that trend in our businesses as well.”
Mexx, Jacob and Smart Set are a stark testament to that. The 95 Canadian Mexx stores face an uncertain future after the Dutch company was declared bankrupt last week.
Encouragingly, online sales have jumped 73 per cent across Hudson’s Bay banners, to $228 million. HBC has moved more aggressively into e-commerce compared to other Canadian retailers and is growing digital sales faster – thanks in part to big contributions from Saks’ U.S. platform.
Hudson’s Bay plans to grow digital to account for a fifth of total purchases through 2018 and said Tuesday it will begin offering in-store pick-up of online orders next year.
Growing online sales as well as the roll out of new Off 5th stores, the ‘discount’ banner to the higher-end Saks, are key priorities for HBC, experts say. There’s room for 25 Off 5th locations in Canada, retail stock analysts at Scotiabank said in a Nov. 12 note.
As of Nov. 1, HBC had 328 locations: 90 Hudson’s Bay, 50 Lord & Taylor and 69 Home Outfitters plus 39 Saks Fifth Avenue and 80 Off 5th locations.
Long live the dept store
Yet much of HBC’s rebounding fortunes right now hails from the tried-and-true if old fashion blocking and tackling of retail: great in-store experiences and fresh products that appeal to shoppers.
Scotia analysts said last month they are “seeing continual improvements” at locations they’ve visited as well as “dramatic improvements in marketing efforts.”
The in-store enhancements include “denser and higher quality inventory, greater sales associate hours, better associate training and of course more of renovation dollars,” Scotiabank said. “These in turn drive a better experience… and sales.”
And HBC is betting big on its flagship department stores remaining its anchor, telling Tuesday’s call it will plow $250 million in renovation money into its Saks location in Manhattan, a department store appraisers valued last month at a whopping $4.1 billion.